Crude oil rallied from lows near $66 last week, shrugging off another OPEC downgrade.
USOIL – Daily Chart
The price of USOIL bounced last week, hinting at a potential base for a low. The first upside target for crude is at the $71.72 level.
OPEC cut its forecast for global oil demand growth in 2024 last week, reflecting recent data and also lowered its expectation for next year. That was the producer group’s second consecutive downward revision.
The weaker outlook further shows the challenges facing OPEC+, which comprises the Organization of the Petroleum Exporting Countries and allies such as Russia. The group also delayed its plan to start pumping more oil after prices hit the lowest seen in 2024.
OPEC’s latest monthly report said world oil demand will rise by 2.03 million barrels per day (bpd) in 2024, down from predicted growth of 2.11 million bpd expected last month. Until last month, OPEC had kept its forecast unchanged since it was first made in July 2023.
China was accountable for the bulk of the downgrade, with OPEC cutting the forecast of Chinese growth to 650,000 bpd in 2024 from 700,000 bpd. Oil use in the world’s second largest economy was up against heavy headwinds as economic strain met a move to cleaner energy.
“Looking ahead, China’s economic growth is expected to remain well supported,” OPEC said in the report.
The move to delay production increases has created a bounce that could mark a low in the near-term until further data arrives.
